How to Qualify for a Standard Mileage Deduction

by Gregory Hamel

    Business owners and employees who use personal vehicles to perform work-related tasks can qualify for a tax deduction on car expenses. The standard mileage rate is a tax deduction that is based on the total number of miles a worker drives a car for business purposes. According to the Internal Revenue Service, the standard mileage rate is 55.5 cents per mile for the 2012 tax season. To qualify for the standard mileage rate, you must use a vehicle for business purposes and meet other tax guidelines.

    Business Use

    The tax deduction for vehicle use is limited to business use, which does not include the cost of commuting to a primary workplace. Business vehicle uses that are tax deductible include the cost of traveling from a primary workplace to secondary workplaces, traveling to temporary work locations, using a car for a business trip and meeting with clients and customers. You can't deduct the cost of traveling to a temporary work site if you don't have a regular place of work, unless that site is outside of your metropolitan area.

    Choosing a Deduction Method

    The IRS lets taxpayers choose between two deduction methods for the business use of a vehicle: the actual expense method and the standard mileage rate method. The actual expense method involves tracking your actual vehicle expenses and taking a deduction on that amount, instead of simply taking a deduction based on mileage. If you want to use the standard mileage rate, you must choose to use the standard mileage rate method in the first year the car is available for use in your business. After using the standard mileage rate method in the first year, you can choose to use either method in subsequent years.

    Restrictions

    You are restricted to using the actual expense method in a few special situations. If you claimed a Section 179 deduction on a car, claimed a depreciation deduction using the modified accelerated cost recovery system in an earlier year or you are a rural mail carrier and received a qualified reimbursement for car expenses from your employer, you can't use the standard mileage rate. If you use five or more vehicles in your business at the same time, such as in a fleet operation, you must use the actual expense deduction method.

    Other Expenses

    Certain expenses related to business vehicle use are not included in the standard mileage rate and can be claimed as a separate deduction. For example, the cost of parking fees and tolls related to the business use of a vehicle are deductible regardless of whether you use the standard mileage rate or actual expense method. Parking fees you pay to park at your normal workplace are considered nondeductible commuting expenses.

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    About the Author

    Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.

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